We now understand things we must correct: Paytm Payments Bank chairman

There will be no material impact on Paytm’s customer acquisition, Vijay Shekhar Sharma, chairman, Paytm Payments Bank and founder & CEO of Paytm, tells Manojit Saha, even as the company’s shares fell 13 per cent. Edited Excerpts:

Are you surprised with the RBI actions or were you expecting it?

How can anybody expect an action like that? In Paytm [Payments] Bank, we have been working and building the bank following guidelines. So, obviously it was a surprise to get a letter of embargo on customer onboarding.
 

We now understand things that we have to correct. There is a well-articulated, detailed information or letter that has been given to us. We believe we can sort out the matters very soon. The RBI has given us a timeline for solving it. We will be able to complete the job and submit our confirmation through an audit report, within the timeline.
 

There are certain observations that the RBI has made. The task is charted out and we have already started working on it. We think things will get sorted out because the observations clearly state what needs to be done.

Have you finalised the firm that will be conducting the I-T audit?

The process has two steps. There is a certain time to correct those things, then the auditor is appointed. So, we do not need to find the auditor yet. We are in the process of fixing the issues.

We learn there are 10 points on KYC-AML issues that the banking regulator wanted Paytm Payments Bank to fix. What are those?

The letter is confidential. It does not carry 10 points. It has a lesser number of total overall points.

Recent trends suggest that when such a ban is imposed, at least 8-15 months are needed to remove the embargo. Do you think the issues will be sorted out much before?

It should be sorted out within a reasonable timeframe because things that are suggested are not that long.

Are the concerns related to processes or systems?

I cannot go into much details, it is related to I-T issues. There are absolutely no issues with systems.

What could be the impact on Paytm’s business?

I do not see significant material impact because Paytm primarily acquires customers through UPI. And bank customers’ count is a significantly small subset of the total customer base. So, the bank's customer base may not increase, but as far as Paytm is concerned, business will continue, and there is no doubt that consumer acquisition, which is led by UPI, is allowed, so that will not have any impact.

Paytm Payments Bank has close to 60 million customers. What was the per month run rate of customer acquisition?

While I cannot disclose that, but I would like to say Paytm Bank has a zero-fee bank account, which means you do not have any minimum balance requirement, making it among the most preferred choice among digital-savvy bank consumers.

Do you see the development pushing back your plan to convert the bank into a small finance bank for which regulatory approval is required?

We have not yet taken a call on this. We would take a call when Paytm Payments Bank is eligible.